Yesterday, European Commission President Jean-Claude Juncker met with President Trump at the White House to talk about trade. Afterwards, to the surprise of many (including me), they held a press conference at which they said positive things about the U.S.-EU trade relationship. Then later, President Trump had five positive tweets about the meeting. It was more amicable than anything we’ve seen in U.S. trade policy for many months.

But obviously, positive tweets only get you so far. What does all this mean in terms of substance? That’s hard to say at this point. The key items the parties agreed on were the following:

– They will work towards “zero tariffs, zero non-tariff barriers, and zero subsidies” on non-auto industrial products. That’s not a huge category of goods, as it excludes agriculture and raw materials, among other things, and zero non-tariff barriers and subsidies seems really unlikely. But still, it would be great if we made progress here.

– The EU will buy more U.S. soybeans and liquid natural gas. This was probably going to happen anyway because of market shifts and other factors.

– They will have a dialogue about conflicting regulatory standards in the U.S. and EU. This is a long-time goal of U.S. and EU trade policy-makers. It sounds easier than it really is.

– They will work together on reform of the WTO, and to address problems to the trading system caused by China.

As for the existing tariffs the Trump administration has imposed on steel and aluminum from the EU, and the retaliatory tariffs imposed by the EU, those will stay in place, but progress on the broader talks could help resolve the tariff issue. Also, it appears that the threatened tariffs on auto imports will not be imposed on the EU.

In some ways, this seems like a “light” version of the Transatlantic Trade and Investment Partnership that the Obama adminisration had been trying to negotiate with the EU. But it’s too early to come up with a label. We need to see how this develops. 

It would be nice if we knew why Trump changed his tone yesterday. Has he recognized the limits of his aggressive approach to trade policy? Does he fear the impact of a trade war on voters? Did he have a good personal rapport with Juncker? This would help us understand whether a permanent change in approach is possible. Unfortunately, it’s not clear at this point where this is all going and how long it will last. But one day of trade peace is nice after months of harsh rhetoric and escalating tariffs.